Winnipeg rainy day fund dips low under pressure
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Hey there, time traveller!
This article was published 03/07/2022 (662 days ago), so information in it may no longer be current.
The City of Winnipeg’s so-called “rainy day” fund is at risk of greatly drying up.
A new finance report reveals the financial stabilization reserve is expected to plummet to $30.4 million by the end of 2022, tens of millions below its council-mandated minimum balance of $71.7 million.
Council has long set a minimum level for the fund to ensure it equals at least six per cent of the city’s tax-supported operating budget, which helps balance the books during tough times.
However, after the massive budget blows of the COVID-19 pandemic, combined with extremely high snow-clearing costs this past winter, the city is now predicting the fund will fall well-below that threshold.
“It’s a pretty challenging position that we’re in right now. It’s unprecedented times,” said Coun. Jeff Browaty, head of council’s finance committee.
The rainy day fund held $75.1 million in December 2021, and was previously expected to rebound to $83.8 million by the end of this year, the report notes.
Browaty noted council is required to approve a plan to restore the fund, if it does in fact drop below the minimum level.
“Once that happens, the finance department will have to present options (to restore it). Realistically, those will be part of the 2023 budget process,” he said.
“It’s a pretty challenging position that we’re in right now. It’s unprecedented times.”
– Coun. Jeff Browaty
The North Kildonan councillor noted a few key changes could still improve the financial outlook.
For instance, the federal government has reached an agreement with the province to provide $20.7 million of transit relief funds to Manitoba, with most of that expected to eventually be passed on to Winnipeg.
While the Manitoba government previously indicated it would match that federal funding within cash it previously committed to the city, Browaty said he’s hopeful new money could further boost Winnipeg’s bottom line instead.
“We’re on the current track where we will (fall below the minimum on the rainy day fund). That makes a more compelling (case) to the province to come forward with some additional supports for transit.”
Winnipeg could also apply for provincial disaster assistance funding to cover extreme spring rainstorms and flooding. The city is still adding up those costs at this point, Browaty added.
Those sources likely won’t be enough to offset all COVID and other financial pressures, however. The city now expects to face $51.8 million in lost revenues and extra costs due to COVID-19 this year, which would bring the tab for the entire pandemic to $217.1 million.
“In the scope of the city’s budget and the lack of flexibility for the fact that we do need to maintain balance, it certainly is a challenge,” said Browaty.
Meanwhile, Mother Nature hasn’t helped. The city has now racked up another $5.8-million snow-clearing overrun, adding to a previous $28-million one approved in April.
“The amount and volume of the snow that we saw this winter was just nothing like I recalled seeing before in my lifetime in Winnipeg,” said Browaty.
He said the next city council, whose members will be elected Oct. 26, could be forced to consider tough decisions to bridge the gap.
“The floor (for the rainy day fund) is council-mandated. The option is there to go below (it.) The option would be to raise property taxes, cutting services is certainly an option, finding other ways to find efficiencies,” he said. “I’m hoping it won’t come to that.”
“The amount and volume of the snow that we saw this winter was just nothing like I recalled seeing before in my lifetime in Winnipeg.”
– Coun. Jeff Browaty
As Winnipeg tackles these issues, skyrocketing construction prices and supply chain delays are also raising the cost of city projects.
On the same day the finance report was released, the property and development committee debated a call to provide $6 million more to build the new north district police station, which would raise its price tag to $31.7 million.
Coun. Cindy Gilroy said such cost hikes reflect global trends.
“The city is seeing this, construction companies are seeing this. This is the cost of construction these days,” said Gilroy, property committee chairwoman.
One councillor expressed frustration, however, telling reporters the city can’t simply alter every project to absorb soaring prices.
“Every day we hear prices are going up. So do we just say, because we can take taxpayers’ dollars that we’ll just keep throwing more money at it?” said Coun. Kevin Klein.
For the police station, Klein said the project should not go forward right now. “Let’s halt it and look at the design (again).”
Full council approval would be required to approve the new police station price, which would replace the aging structure at 260 Hartford Ave. with a new one at 100 Sinclair St.
joyanne.pursaga@freepress.mb.ca
Twitter: @joyanne_pursaga
Joyanne Pursaga
Reporter
Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.
